Lenovo's profit up 30 per cent, mobile business unit continues to grow

Lenovo is close to surpassing HP to become the world's largest PC vendor

Chinese PC maker Lenovo said net profit in its fiscal first quarter ended June 30 grew by 30 per cent year-over-year, as the company inched closer toward surpassing HP to become the top vendor in the market.

Lenovo's net profit reached $US141 million in the quarter, up from $US108 million in the same period a year ago. The company's revenue in the quarter was at $US8 billion, a year-over-year increase of 35 percent.

At the end of this past quarter, Lenovo had a 14.9 per cent share of the PC market, putting the company second behind rival HP, which had a 15.5 per cent share, according to research firm IDC.

The Chinese PC vendor has consistently reported strong earnings as its market share expanded to surpass Acer, and Dell last year. This comes despite a slowdown in the PC market because of weakening economic conditions, and tablets cutting into the sales of notebooks, according to experts. In this past quarter, Lenovo's worldwide PC shipments grew by 25 percent year-over-year, while in contrast, shipments by both Dell and HP decreased both by about 12 percent, according to IDC.

A main driver of Lenovo's business has been its dominance of China's PC market, which has grown to become the world's largest. The company said in its earnings report China generated $US3.5 billion for the company in the quarter, accounting for 44 per cent of the Lenovo's total sales.

The company has also been expanding into emerging markets, where its growth has been strong, with its shipments increasing in countries like India, Brazil and Russia.

While Lenovo's notebooks made up the majority of the company's sales, at 54 percent, the company has been investing heavily in developing products outside the traditional PC space, including smartphones, tablets and smart TVs.

In the quarter, Lenovo's business unit dealing with mobile and smart TV products reported sales increasing by 173 per cent year-over-year, reaching $US587 million. These products made up 7 per cent of the company's revenue. In this past quarter, Lenovo's market share in smartphones in China, reached about 10 percent, putting the company third behind Samsung and Chinese handset vendor ZTE, according to research firm Canalys.

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Michael Kan

IDG News Service

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